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tv   World Business Today  CNN  January 27, 2012 4:00am-5:00am EST

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p.m. eastern. live coverage of the florida primary. our coverage of america's choice, 2012, continues right now. i'm zain verjee at cnn in london. here are the top stories. amnesty enter flash say loyalists of moammar gadhafi have been subjected to torture and ill treatment. doctors without borders says lit stop sought work at some detention facilities because detainees are being tortured and denied medical treatment. libya's ambassador to the un says his country does not approve of detainee abuse. nigeria easement is asking those to publicly identify themselves so a dialogue can begin t. group is claiming responsibility form a series of
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attacks last weekend in the north that killed more than 200 people. the u.s. republican party presidential kanld dats faced off in the final debate in the u.s. state of florida. newt gingrich quickly fired the shot at miss romney over his immigration policies. both candidates have relentlessly attacked each over in the media in the past few days. a frightening day for australia's prime minister left unanswered questions about her security. activists surged on a restaurant where she was attending an event. police decided to rush the prime minister to safety. those are the top stories from cnn, the world's news leader. i'm zain verjee and "world business today" starts now. hello and welcome to "world business today," happy friday to all of you out there.
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i'm nina dos santos in london. from cnn hong kong, i'm pauline choiu. i'm john deaf tar yoes in switzerland, the top stories on january 27th. nearly a quarter of spain's workforce is now out of a job. record results for samsung as smart phone sales soar. it's planning to sink $42 billion into its business. the key to change is evolution and not revolution. that's according to one of the richest oligarts in russia vrnlths we knew it was bad, but not quite this bad. spain released its latest jobless figures showing nearly 23% of its workforce is unemployed over the course of the last three months up until december.
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that's roughly equivalent to about 5.3 million people across this country, nearly half a million more than previously thought. it's certainly not good news for the new prime minister and its entire cabinet. the new prime minister has been pledging to get spain's economy back on track, only been in the job for a few months. let's get perspective and go to cnn madrid where we can join al goodman, al? >> reporter: nearly 5.3 unemployed. but the prime minister said in recent days it would be 5.4 million. they're trying to get this new conservative government, trying to get its message out. here they are a case where they were saying it was going to be worse. it's not quite that bad. in the previous quarter, third quarter of 2011 it was just under 5 million. economists predicted it would go
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oilt because the economy is very stagnant. many predictions are that it would go into recession. there are so many chilling stories of people out of work, and we've got a report here catching up with one man. let's listen to his story. >> reporter: spain's economic crisis has spawned many hard luck stories but carlos gonzalez at 29 can hardly believe what he faces. he's one of spain's five million jobless. idle since his last job installing air conditioners. at the nearby unemployment office, he has lots of company, xetd tors all for the scant job openings. >> i have sent my c vfrnlthsz around and visited many companies, but there are no jobs. >> reporter: especially in his line of work, construction, where many projects simply stalled. gonzalez's unemployment benefits ran out four months ago. to top it off, his bad left knee, already operated on four
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times took a turn for the worse. >> doctors told me to forget about working construction because i could end up in a wheelchair. >> reporter: a far cry from his dreams. >> translator: being unemployed, i can't get married or have kids or become independent. i'm still living with my parents. >> reporter: in addition to being out of a job and having a bad knee, gonzalez has another big problem starting seven years ago he and his girlfriend have made a $70,000 down payment for a new home that was supposed to be built right here. instead gonzalez and others are still waiting for the government to approve zoning. to protest here they've camped out here for 485 days. some even sleep here at night. last month, dressed up like houses, they took their plight
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to the annual christmas lottery drawing in madrid. they say they paid for the farmland but local and regional governments haven't delivered on their promises. although they say officials have told them a deal is in the works. >> you're really committed to be here, aren't you. >> translator: until they affirm a solution for my house, i'm not going to leave. >> reporter: a country crisis, and for gonzalez, an especially complicated time. >> and what's next, an increasing number of young span yards in particular will moving ap broad. in the coming hours, the cabinet is expected to approve further budget discipline measures to rein in the free spending going in saying there will be sanctions if they overspend their budget. nina? >> okay, al, many thanks for that. pauline? spain's latest quarterly
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unemployment rate far out strips its european neighbors. we've compiled the numbers from the month of november in spain and other countries. this is from euro stat which is the eu statistic service. take a look at this graph and take a look at the overall eu numbers. first of all, take a look at the entire graph. you see the range from 5.5% in germany back in november to 22.9% in spain. now, take a look at the eu number in the middle of our graphic. it's at 9.8%. as you can see, the jobless rate in spain is more than twice as high as the unemployment rate across the european union. nina? >> certainly sobering statistics there, pauline. singling out spain for its economic problems is about like splitting hairs. the entire eurozone, of course, needs a lift these days. greece in particular has born the brunt of much of the blame.
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the country is resuming debt talks. they are back in athens to negotiate with the greek governments. the parties disagree on the rate of interest greece would have to pay on new bonds. the government spokesman says these talks still remain at a delicate phase. delicate or not, tough decisions and serious teamwork are needed to fix europe's debt crisis. that's what uk prime minister david cameron is telling his counterparts. earlier our richard quest ask he was upset that they hadn't made more progress. >> of course it matters not just to the countries of the eurozone but also their nab ors about britain that the crisis is resolved. i'm not saying it's easy. i'm not saying there are simple switches they got to flick.
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these are difficult decisions, sometimes expensive decisions, and they involve politicians having to give up powers as well. if you want the single currency to work, it seems to me therefore stherm things that have to be done and longer term issues that have to be grappled with. >> both chancellor merkel and yourself are saying the same message in a different way, get on with it. >> you can put it like that. what i prefer to say is short term to ease the cries zis, you have to strengthen the banks and the firewall has to be big enough to deal with any contagion in the system. >> that's british prime minister david cameron speaking to cnn's richard quest earlier at davos. let's take a look at the sea of red. seems the major indices are pairing some of the ingas earlier on. yesterday and thursday's session after the federal reserve announced they would keep the
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records the same at least through 2014. what has investors focused is largely the outcome of those private sector creditor talks in greece i was talking about before and some of the french banks are very heavily invested in the sovereign debt of greece and some of the banks weighing particularly heavily on the cac 40 which is one of the markets falling the most. the markets also reacting to disappointing economic data out testify united states. we saw a drop in new home sales for the month of december. that means that it is perilously did to read the economic signs coming out of places like the united states these days. >> although australia did react in the commodities market. i'll get to that in a little bit, reacting to some of u.s. information nina was mentioned. here in asia the stock markets ended the week in mixed territory. keep in mind not all the exchanges were open.
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still closed for the lunar new year holiday. australia is back open. it ended the session up about .4%. mining stocks gained after commodities jumped on thursday. this was sydney's first reaction to the fed's announcement in the u.s. that low interest rates will continue for at least another three years. this spurs on the hopes of growth in the u.s. and as a result the commodities rose there. the nikkei was dragged down by poor performing tech stocks. at the end of the session down just a fraction there. here is what happened. for example, one of the big companies, nec corporation, a japanese electronics maker, its shares were down 7% after the company issued profit warning on thursday and announced it would cut 10,000 jobs at nec. nina? >> pauline, staying with the technology sector, at a time when both nokia and research in motion are struggling to compete with ap nl the smart phone market, samsung it seems is
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surging. we saw record sales of the company's galaxy hand-held devices helping samsung to post fourth quarter earnings of some $3.6 billion. that is actually up about 17% only the same period of the previous year. however, the company didn't fair quite as well with its tvs and computer panel display businesses. this meant net income was actually for 2011 in total down by about 15% on 2010. samsung is going on the offensive this year with about $42 billion worth of investments in some of these products. but for the moment the future does look rather good for this south korean company, pauline. >> nina, those, were enough to take samsung's share price to an all-time high on this friday. that's a pretty nice comeback when you look at how far its stock had fallen just five months ago here. that was the dip there in august. a combination of
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worse-than-expected earnings, poor tv business for samsung and those many patent infringement lawsuits between samsung and apple actually dragged samsung down. but the rise of the galaxy and the company's commitment to product development has led to a stock surge of more than 65% since that dip back in august. that's pretty impressive when you consider samsung really only entered the smart phone market in 2010. samsung's share price was up 1% today in seoul. nina? >> pauline, the four remaining u.s. republicans competing for the company's presidential nomination locked horns again. during cnn's debate in florida, they appeared to put aside their differences over the front rounr in mitt romney's wealth and the tax he has or has not been paying on it. he released his tax returns this week under pressure by this man,
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newt gingrich. as president barack obama calls for higher taxes on the rich, romney defended both the relatively low rates he pays and the motives behind his money making. take a listen. >> i'm proud of being successful. i'm proud of being in the free enterprise system that creates jobs from other people. i'm not going to run from that. let's put behind this idea of attacking me because of my investments orman any and get republicans to say, you know what? what you've accomplished in your life shouldn't be seen as a detriment. it should be seen as an asset to help america. >> and the florida primaries will take place on tuesday next week. coming up next on "world business today," we speak to one of russia's richest men at the world economic men in davos. the last time we heard from ol lek dare pos ska, he said russia should in no way step in to help europe. we'll see if he changed his mind since then. don't go away.
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yar'adua,. welcome back to our special coverage from davos, switzerland. good fences apparently make good neighbors. russia is increasingly aware there's no hence high enough. the world's largest producer of aluminum chief executive oleg dare pass ska he said russia shouldn't help europe in any way. when i caught up with him recently, he wasn't so black and white. >> we're all important. it's important to understand there's quite a long story behind the crisis, that governments in europe exceed their level of spending which was because of their expectation, the excitement out of european union, the
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enlargement, those stuff. i think now it's very a complex political process who could deal with social cost and benefits in one year. this is how they fry to keep plight stability in european zone and at the same time do the necessary thing to cut the budget down and actually to deal with the debt. >> as a major manufacturer, particularly in the aluminum space, do you plan for the euro to unravel, are you making plans for the euro not to be around with your major clients, or is that extreme? you don't see the unraveling of the euro? >> i do believe european companies would be our major clients and the transportation doing very well, packaging sector doing well, electronics in some parts. of course, they have a problem with infrastructure and real
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estate. these are sectors which will struggle until the debt crisis will be resolved. >> you don't see a break from the euro. i want to talk to you about the downgrade of about half a percent in 2012 because of the eurozone crisis and the links between russia and europe. 3% to 3.5% is what we should expect from russia this year in your view? >> yes, we'll try. >> you don't think it's going to be worse than that is what you're suggesting? >> no. i think russia will try to cope with this number. we actually have more opportunity. but since we have election, since we have a lot of restructure in the government, there would be a lot of delay for necessary steps, but i do believe we can keep rate of growth of the last year. >> that leads me to my final question, that is the pressure on the government to deliver results for the middle class, this rising middle class we see in russia today is the diversification happening fast
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enough to deal with the political pressures. it's not an easy challenge. >> you can't do it in one year. let's say it would be an agenda for the next president's term, for the next six years to find the solution which will give an opportunity for middle class to exercise its ambition and competence. >> you don't see a revolution then -- >> let's talk about russia in terms of evolution. >> evolution but not revolution. a little give and take with oleg dare spas ska, he's head of gm plus which has mining assets as well. i had conversation with a key adviser to president medvedev. he says they're taking the uprising they saw in december very seriously. they're hoping the spending in the winter games and world cup will show the middle class they're serious about
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diversification. we'll take a short break from davos. we'll have more coverage right after this. ♪ ♪ so let's set the world on fire ♪ ♪ we can burn brighter ♪ than the sun ♪ carry me [ male announcer ] the all-new chevy sonic. from your first time... to the time of your life. chevy runs deep.
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the winter games and world cup
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welcome back. the theme at this year's world
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economic forum in davos is transformation. some are hoping the markets will bring around the much needed changes in the global economy. those nations are being hurt by the eurozone crisis. that's why the world bank is making some $27 billion available for countries in eastern europe. john defterios asked robert cell lick what he thinks will bring to the markets. >> we have predicted slower growth. developing countries provided about two-thirds of the growth over the past five years. what we suggested by that contingency, if there's a more serious breakdown in the eurozone, you move from beyond muddling through to not being able to have a successful progress with italy and spain that effects the eurozone, then developing countries have to be prepared. they have to pre fund some of their own bonds, look at the trade side, they have to look at the banking side. what it shows is while the
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developing countries have been a source of growth, we're all in this boat together. if europe stumbles and fails, it will hurt everybody. >> let's put this into context. the world bank took similar steps in 2008 when it provided emergency help to countries hit by the global financial downturn. pauline? >> the domino effect that robert cell lick mentioned is not lost on china which invested in all corners of the globe. it's a big year for the world's second largest economy. china's president, hi jintao will step down this year. his replacement faces the challenge of maintaining a controlled growth by trying to slow the economy at the same time. cnn's stan grant looks at how that cooling off is affecting everyday life in china. >> reporter: things move fast here. what once were towns are bustling cities today. over the past 20 years the lives
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of people here have been completely transformed. the province is the highest impo importer, the highest ex-porter, one of the richest areas in the country. in the past couple of years it started to feel the squeeze of the slowdown in the economy. doing business is getting tougher says this woman. she runs a fruit and vegetable market but says it's getting harder to make ends meet. inflation, she says is killing her trade. when prices of my vegetables go up, fewer people buy them. inflation is starting to ease, but china's economy is in transition. growth is slowing, big export markets, europe and the united states, shrinking. chinese are not buying enough to fill the gap. >> it's a different model, isn't it? if you're going get people to spend money, they have to feel comfortable. they have to feel their retirmtd and health care, et cetera, is going to be somewhat taken care
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of. then they'll spend more money. >> all of this in a year of political change. president hi jintao begins handing power to a new generation of leaders. the vice president tipped to replace him. >> we don't know much about him. no matter what he really thinks, he'll have to be tough. he'll have to be tough with a smile on his face. >> reporter: young chinese are looking to him for answers. this chicken vendor feels her future is not so bright. she works with her mother while studying at school. she dreams of university, but -- with so much pressure and come decision, she says i just feel at a loss about my future. i'm not sure what i'll do. china's grown used to the wild ride. it may now have to get used to applying the brakes. stan grant, cnn, gaun dong.
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welcome back to "world business today," i'm nina dos santos. >> i'm pauline choiu at cnn hong kong. >> i'm john deaf tear yous at the world economic forum in davos, switzerland. greece certainly been front and center of the debate in davos this week. but not all of those attending the world economic forum's economic meetings think it ought to be. some economists believe leaders such as the german chancellor angela merkel need to act more
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swiftly on a much wider problem. earlier richard quest put it to ken row gog that mrs. merkel is starting to display emergency on the matter. rogoff himself is not convinced. >> heard this urgency for two years now and they keep saying this is it, we have solved the problem, and we're nowhere near the end of this i don't think. >> so what is the problem now? is it just greece? is it sitly? where does the problem lie? >> it certainly is not just greece. there are other countries that need deep debt restructuring, talking about portugal, possibly ireland, possibly spain. they need to decide where to draw the line, where it won't cost so much that it's better to save than not. but greece, that's not going to work. >> well, rogoff also mentioned spain as a cause for concern there. we also remind you madrid has just announced its unemployment figures, showing a rate of
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nearly 23 prd unemployment for that country over the course of the last quarter of the year. that means about 5.3 million people are now out of work across spain. so the situation just gets worse there. at this point we want to go back to john live in davos. i want to start out by asking you about the economic backdrop. throughout the course of the week in davos, we've had news that the united kingdom has seen its country edge towards a recession with gdp shrinking .2%. and now the dismal unemployment figures in spain. presumably this has dominated the agenda. >> reporter: there was discussion anti this cooperation between the west and east and seeing the developing world lifting the boat for everyone. i talked to numerous ceos who said they thought the eurozone crisis was pretty bad, didn't know the mood was equally as bad. i saw the figures from the uk
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and they're suggesting this is much deeper than they thought and worried about the spillover. the world bank and imf in the last seven to ten days have been warning that if this gets worse, it can help bring down china, india, latin america africa, in particular africa, south africa has seen its growth rate ratcheted down quite a bit. a lot of concern of how we proceed from here and the debate suggesting that germany needs to move faster and we know negotiations are taking place with greece as we speak. you can't talk about the broader global economic picture without mentioning asia, of course. stephen roach has a lot of experience in this area, previously served as the chairman of morgan stanley and is now the bank's nonelection chairman. he joins us of course with our live coverage. nice to see you again.
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>> great to see you, john. >> let's start with the question of how deep the eurozone crisis reaches in to large economies like china. can china sustain a growth rate of 8%. the inflation has come down. they have a bit more leeway here to lower interest rates. can they sustain 8% in 2012? >> i hope so, john. i think china right now has slowed, export-led economy. largest export market is europe. so they take this european crisis very seriously, second largest export market is the u.s. the u.s. isn't exactly moving ahead on all cylinders either. export-led china does face big strategic rebalancing challenges, especially the need to move to more of an internal consumption model. that's going to take time. >> you're more concerned about india. we know the large industrial groups of india have been suggesting government is not moving fast enough to continue with the reforms itself. can india sustain the sort of
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growth it needs to lift more out of poverty. >> john, that's a great question. china has discretion. it can definitely move the monetary and fiscal levers dramatically. india can't. the rupee is under huge downward pressure. they still have an inflation problem so that monetary policy is pretty much frozen. they have a fiscal deficit on a consolidated basis of 9% of gdp. they move move the fiscal lever either. in the event of a sharper than expected global slowdown, i think india is in trouble. >> on this beautiful glorious day, we don't have a very clear outlook for the eurozone, nor even the u.s. we'll hear from tim geithner in about 50 minutes time. you're going to go listen to that. how does he serve up the constituency to say that the obama administration has its hands on the tiller and can manage a recovery better than 2% in 2012?
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>> good luck for secretary geithner. the political process pretty much freezes them out of any major policy initiative. they have to hope that the economy is going to continue to plow ahead. the u.s. consumer who has not grown more than a half a percent since the first quarter of 2008, encumbered by excess debt, saddled by low saving, jobless rate of 8.5%. that's the big issue. the obama administration doesn't have any concrete policy agenda deal with america's struggling consumer. >> i want to bring up this issue of the debt. for the united states and the eurozone are they deleveraging too slowly where you can see more recessions gauze we're going to drip, drip, drip deleveraging. savings rates are going up because people are quite panicked. should we be deleveraging faster? >> the household sector again is the place to watch, john. i think the debt to income ratio
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for american households peaked at 140%. it's down now to 115% which is progress. but the 115% is 40 percentage points ab xwov the 75% average that prevailed in the final three decades. we've got a long way to government go. if we want to accelerate that process we've got to think about radical policies of debt forgiveness, especially in the more taj area. >> that's what i want to get over to. stephen roach has been a big china advocate for the last decade, if not longer, aim correct in that? >> that's right. >> does it apply to our thesis in davos for 2012, decoupling. can the emerging markets decouple. on the left they're shackled and dependent on the united states and eurozone or have they broken free or at least breaking free? i know that depends on where you are around the world.
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robert zoellick has the horizontal line. >> i'm a big china bull. i think the new five-year plan will move them to the right of your vertical line because they are too shackled right now. they're heavily dependent on external demand. they have to move to a more consumer-led model. if i had to pick a spot -- this is true of most -- i'm slightly to the right of laura tyson. laura has always leaned to the left for me on a lot of things. >> between laura tyson and mark spellman. >> i'm definitely moving to the right. if you have to make a prediction, i have to see evidence. >> look at the europeans, so bullish. >> they have to be to put numbers like that. >> let's go back to pauline
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choiu. >> john, you're certainly talking to the asia expert there. i just went to a panel in hong kong, the asian financial forum where they were panelists talking about the global economy. one of the panelists said it's time for asia to help asia. i'm just wondering there where you are if there are any sort of fears of protectionism since asia really is where the growth is. are you hearing any buzzwords about people worried about that? >> it's a phenomenal question. you talk to stephen roach, he'd say the same thing. the protectionist concerns are coming from united states. we heard the state of the union address by president obama, they're less concerned about the protectionism in asia and more concerned of whether they can keep up the pace of 6.5% in 2012 to give the global economy the boost it needs while the united states is struggling to get 2% growth. they're watching the relationships between china,
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south korea and japan and whether we have the triangle of growth question can drive global growth from the east. >> john defterios, thank you very much. we will check in with you later on when "world business today" comes again. for the meantime, that's it from us. i'm pauline choiu in cnn hong kong. >> i'm nina dos santos. we'll see you in about four hours time for the opening bell on wall street. join us then if you can. [ lane ] is your anti-wrinkle cream gone...
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[ female announcer ] neutrogena® makeup remover erases 99% of your most stubborn makeup with one towelette. can your makeup remover do that? [ female announcer ] neutrogena® makeup remover. this week a special edition of "marketplace middle east" from the world economic forum on the slopes of davos, we take a look at the new realities for 2012 and the way forward for the arab spring states. this week "marketplace middle east" is in davos, switzerland. exactly a year ago when we were covering the world economic forum, events in egypt began to unfold. the ripple effects of the on going arab spring have been enormous. how does the region move forward from here? it's a question being asked in
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davos. this gathering of power brokers from the east and west is an opportunity to pier through the wind screen at the year ahead while looking back at through the rear view mirror. just one year ago tahrir square was not a site associated with up rise sings. the first protest broke out as the world economic forum got under way. it's being seen as a generation game-changer reshaping the political and economic landscapes. four years ago arab business leaders were basking in the limelight with $100 an oil causing a boom in the region, premier football clubs and funneled money into giant real estate projects. today in the halls of the forum, there remains a bitter after test from the western led banking crisis. trading volumes are down and so is the dealmaking.
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oil is back above the century mark but here in davos, a middle east market of more than 300 million people can offer other opportunities after the red cal change present pd by the up rice sings. long-term forecasts for the middle east are not keeping pace with emerging market peers. according to hsbc, between now and 2020, growth in the region will average 2.6%, ralph the rate of asia and africa, for example. i caught up with the richest man in the middle east prince ala lead bin tao and asked him whether businesses will remain open to foreign investment even after the rise of parties in tunisia and egypt. >> there's no doubt the islamic path or factor is beginning to play a roll. i believe they have no choice but to be more friendly but they could like to continue ruling their countries. to continue that they have to work on the economy,
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unemployment and benefit the people. but right now i think a form of capitalism, new form capitalism with mix of islamic tilt is something they have to live with in the coming years to come. >> closer to home on domestic policy, a very death question about king abdullah as a reformer. will the reforms outlive him eventually? >> those countries in the world, no matter what they are, markets or the public, emirates, those that did not get the revolutions, they should at least get the messages of the revolution. and they need to not only change and make reforms at the financial or at the social lvl, but they have to do it at the political level, also. it's very important, because the masses are witnessing and seeing what's happening all around them. i believe v i believe there's no choice but for saudi arabia and
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whomever may succeed king abdullah, god forbid, after he lives long, will have to withstand the political reforms in our region. >> a year ago there was a belief in the royal court that there was not a consensus to take military action. a year later it seems to be an inevitable move here to keep iran boxed in with sanctions and to not try to block the streets of hormuz. >> i don't believe war is inevitable between iran and the united states or between iran and the rest of the world. i don't believe the hormuz strait will ever be closed. iran knows this is suicide. iran knows what happened next to the west. we know what happened to saddam hussein and iraq. this is still very vivid in their mind. i believe the united states engaged with iran, talk to them and see what you can do with them. >> it was interesting, in an veer interview a week ago the
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oil minister said saudi arabia will provide up to 2.5 billion barrels a day to protect the energy market. is that a wise move? >> not only wise, this is a very political and strategic freeze from our old oil minister who reflects the views of king abdullah. for saudi to become public and say we'll flush as much oil as needed to compensate for any potential loss of iranian oil, that's a big message to iran, don't keep threatening the world economies with the close of hormuz. we will, if push comes to shove, we'll compensate. that's a big message for the market, also, that we'll maintain the dollar, that seems to be good for the consumers and good for the producers. >> as the fallout from the revolutions in north africa continue to unfold, can the oil-rich gulf states help in the rebuilding process. they're asking for more power on the world stage.
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but can they deliver in the region? we'll find out after the break when "marketplace middle east" continues from davos. [ jennifer garner ] there's a lot of beautiful makeup out there. but one is so clever that your skin looks better even after you take it off. neutrogena® healthy skin liquid makeup. 98% saw improved skin. does your makeup do that? neutrogena® cosmetics. 0ñ@ñfñwill be giving away passafree copies does your makeup do that? of the alcoholism & addiction cure. to get yours, go to
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here in davos, the arab region remains at risk for 2012. 2011 was a change with protests topping governments and forcing change. after revolution comes rebuilding and some opportunities for the oil-rich gulf states. leone la canny has that story. >> reporter: one year since the revolution that toppled os any my mark, egypt is still in disarray. two of the region's other
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long-term leaders have also been ousted with tunisia and libya still struggling to find their political footing, all this as the bloody crackdown in syria shows no signs of abating amidst the turmoil the region's economies are under pressure. the imf forecasts relatively slow growth for the countries in transition, particularly egypt which is projected to grow at just 1.8% this year, a dramatic fall compared to just over 5% in 2010. the economic outlook for the cash-rich gulf arab countries is more promising at about 4%, supported by support from high oil prices, analysts say it may well be the gulf states that pull their neighbors out of the economic doldrums. growth in the gulf arab countries could be hampered by the global economic downturn and european debt crisis. as food prices hover around $100
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a barrel, the gulf states are flush with cash. >> we're seeing in the past a lot of these countries exporting these revenues to the north african states in the form of real es steet projects, industrial schemes, tourism projects. i would expect over the next few years for these projects to be reability vaeted as the gulf states look to spread the wealth. >> reporter: when the global financial crisis hit the western economic landscape became more uncertain. middle east investors kept their cash closer to home. the research group arabia monitor says the middle east and north africa historically received up to 70% of the development aid from the goufl cooperation council or gcc. >> the north african states offer a lot of opportunities for the gulf nations. in proximity to europe, they offer cheap labor, cheap natural resources and many of the gcc nations an north african states, it's win-win situation. >> reporter: the link between the arab states may be equally
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beneficial. analysts say the cash risch arab states will be looking for political clarity before they invest their money in this new middle east order. leonely canny, abu dhabi. here in davos, they're still wrestling with the weight of the european debt crisis and the impact on global growth. the banking crisis is still impacting the region as it tries to put itself on the global map. uni leaver makes more than 50% of its in. >> two messageless coming out of the arab spring, if you want to. the first one is get our business back on track because people need to eat, people need their basic necessities. we're seeing the business bigger and stronger than what it was before. for us, there's the second message that's in there which the power of the consumer now. the consumer is getting organized. that's probably what i call the first revolution of the
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internet. if the consumers can get on the square and bring a government down in 17 days, they can take a company down in nanoseconds. we're saying why don't we harness the power of the consumer for a force for good, help us build different business models, sustainable consumption, more equitable growth. we see this as a more unique opportunity to define a better business model or capitalism moving forward. >> there would be potentially in the east a market of 300 million consumers. does it frustrate you you have to work country by country and you don't get the scale that uni leaver would like. >> there are many opportunities to driven efficiencies in between those countries as well by making the cost of complexities and cost of doing business down a little bit. we see the money trickling through to the consumers. as a result the markets are fairly strong. >> the finaling thing i wanted to talk to you about from your perspective, we were together in
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saudi arabia and in davos, east trade, middle east going to china, middle east to southeast asia, it's transformational. >> absolutely. if you see the possibilities of globalization, lit be between india and china and the countries around it. we can't just look at solving our european short-term problem of the monetary union and the fiscal and monetary discipline, the role of the ecb and all the things that go with it. we have to be more externally focused to ensure europe stays competitive. at the end of the day we need to grow, to provide also the jobs for europe, for the social systems we've chosen. that requires a certain level of competitiveness. it's very important that we take that into account very seriously. >> and that's it for sp special edition of cnn marked place middle east this week from davos switzerland, i'm john defterios. thanks for watching. we'll see you next week. -- captions by vitac --
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